Legislative Setback for Cap and Trade

Though little noted in the U.S. press (and, not so ironically, more prominently covered in some of the European press), the Obama Administrationâ''s efforts to enact a carbon trading system suffered a rather severe reverse last week when the Senate rejected an effort to put proposed legislation on a fast track by attaching it to the Federal budget bill. The idea was to bypass the Senateâ''s toxic rule requiring 60 votes to close debate on most bills, whichâ''with the Democrats holding slightly fewer than 60 seatsâ''enables Republicans to block their initiatives by filibustering.

The Senate voted 67 to 31 against attaching the trading bill to the budget, a decisive margin that strongly signals trouble ahead when the administration tries to get Congress to adopt a cap-and-trade system by the normal legislative process. Though some Democrats may have voted against the Administration because of procedural scruples, opposition also came from coal-state Democrats worried about the costs a trading system would impose on their local industries and constituents.

The Senateâ''s action casts doubt on whether the United States will be able to show up at a major global climate meeting at the end of the year with anything to take credit for (which is why the European press is paying attention). But it could also open a crack in the political door that up to now has been closed to the idea of carbon taxation. Might taxes combined with regional rebates turn out to be the more sellable deal after all?